ASX Momentum Trade Book - Part 2

[grah33]

interesting results Peter. 3ATR trailing didn't do too well for you which is what i'm using (trend following), but i wouldn't have traded when you would have (bear market) so maybe 3 atr would have done well for me. i would have been there during that little up-spurt in october (if i was more ready )and during some parts of the ranging market afterwards which didn't continue to rise. and i would have traded US market if my market filter said SP500 was rising (assuming the aussie was down).


Bear: great tips Bear, thx.

trend following vs swing trading: you know, i'm getting newsletters from a popular author you have all heard of and he talks about mean reversion (a type of swing trading) and the problems with trend following. my impression is that i'm going to get 'escaped profits' when the market starts to range so that's a bit of a concern . i hope trend following will still work well enough if i'm using it with the market filter. maybe in the future if i start to see that i'm losing too many open profits i can have some forex trades out there (replacing some of the stocks)
and that will make me more immune to bad market conditions? or trading the same breakout setup but exiting differently? let me know if you have any tips on this. i wonder which brings bigger profits out of swing or trend following

 

[peter2]

EOW 42 update: ASX Momentum Portfolio +23.8% ( 51% invested in 4 stocks ) XAO -12.7% (past 42wk)

The XAO bounced this week (+1.2%) after a surprisingly horrible Monday. Our portfolio lost 1.6% this week as the high volatility continues.

This weeks sells/buys: nil

CGC: Priced closed below our exit trigger. Sell next open.
API: Price at our exit trigger. Sell next open.

Outlook: The trend remains down and I'm getting tired of seeing it. It would be easy to trade a lot more in this portfolio as there have been plenty of break-outs, but would it be worth the extra effort? I estimate that for every ten extra trades, nine of them would total break-even or more likely a small loss of 1 or 2 units. I'd need to be lucky and get into one very good result to make it worthwhile. IMO the reward for the extra effort is not worth it atm. I can be patient.

I'll look around for a few more trades next week, as we'll have more cash and less portfolio heat.



ps: Only ten weeks left to my year here.

 

[skyQuake]

Hey pete, do you bother looking at the corp actions behind the stocks? Eg if a stock breaks to new highs because of takeover, or in the case of CGC and API - S&P ASX 200 index adds.

 

[peter2]

If the price action gaps up, then yes I'll look at the news expecting to find the reason for the jump. I don't routinely look at the corporate news releases and these sometimes lower my results.

If CGC and API broke out on the news that they are being added to the ASX200, then I didn't notice it. Once upon a time, being added to an index helped the share price.These days most of the insto analysts have worked out the short list of the index additions and have already started buying in anticipation of the news (the break-out?).

This laziness of mine, does cost me money, every year. While I don't knowingly buy just before a scheduled report, I don't often check and sometimes get caught with a price spike. I also don't routinely check for scheduled news on my open trades either and get caught out sometimes. SUN was the latest example of my laziness. 5K open profits turned into 6K loss very quickly. If I'd bothered to look at a corporate calendar and seen the scheduled update I would have had the option to realise some of those profits before the news.

I estimate that my edge would improve significantly with a readily available "skc info analyser " app.

 

[peter2]

Trading update: TGR is trading our buy trigger (>4.60). I mentioned this trigger when we last sold.

TGR: Bought BO (4.63) iSL is 4.40

Note: I'm always wary of BOs in the holiday weeks as the volume is lower than usual. Although, when you think about it, any BO, at any time of year can fail.

 

[kid hustlr]

TGR looking strong.

Any thoughts on SIQ Pete?

 

[Nortorious]

TGR looking strong.

Any thoughts on SIQ Pete?

TGR is nice, I would like to see more volume come in to keep it moving upwards. Might happen today.

SIQ, that looks pretty strong as well. Has advanced beyond an entry point in my opinion as the risk is too high to get into it now. Without much background, it is also hard to put some structure to it. It is trending up and had a nice kick of volume last week.... You could do a lot worse that's for sure.

 

[VSntchr]

Trading update:
ACX: Bought near new high (4.77) SL is 4.40 Desperate to get back in this one.

Desperation proving worthy today. This one has been a good performer for a while, although there has been some churning around $5.00. This appears to have been overcome with a big push up. The low liquidity of this time of year clearly helping, so I have reduced size on the spike and will look to re-enter on a new setup.

 

[grah33]

peter:
i've got to worry about news and reports as well. got a blast from ckf recently but it could have been the other way too. where are u getting scheduled reports and scheduled news from? my broker doesn't inform me of future news/report dates, just on the day. and which kinds of reports and news do you pay attention too ? as much should be ignored. just wondering what technical traders do to manage their trades /avoid trades in connection with news/reports.

 

[VSntchr]

peter:
i've got to worry about news and reports as well. got a blast from ckf recently but it could have been the other way too. where are u getting scheduled reports and scheduled news from? my broker doesn't inform me of future news/report dates, just on the day. and which kinds of reports and news do you pay attention too ? as much should be ignored. just wondering what technical traders do to manage their trades /avoid trades in connection with news/reports.

FNArena is pretty good for a basic calendar. This will keep you in the loop for ex-div dates, reporting dates, investor days etc. Some stocks won't be covered - but they do a pretty good job at the ASX200 at least.

Also try morningstar, they have a comprehensive dividend calendar and their earnings calendar is pretty decent too.

 

[peter2]

EOW 44 update: ASX Momentum Portfolio +25.2% ( 47% invested in 3 stocks ) XAO -9.4% (past 44wk)

The market rallied nicely over the past two weeks adding +3.5%. This portfolio benefited a little (+1.4%) while I took a short break and totally missed the opportunities to profit from this rally.

This update ends 2015 and there are only eight weeks remaining of my ASF "tour of duty". However let's not dwell on the end but look forward to the new year. The portfolio has plenty of cash and I'll look for opportunities to use it immediately. (Note: HFR has an interesting chart.)

Outlook: I'm cautiously bullish, but to a long only trader that has to be the outlook. I'm expecting similar market conditions next year, plenty of ups and downs with high volatility. Our strategy of predominantly trading with the price momentum worked out OK for us last year. There is no need to change our trading style. We'll be buying price when it starts to move up and sell it when it starts to reverse provided that it's gone >+1.5R.

What's new: Remember that 10K I removed from the portfolio a while ago? Well, it's time we put it to work and the new year is an opportune time to do it. Further details to follow.

 

[peter2]

Trading update: new trade

HFR: Bought today's open (1.65) after last week closed > 1.60 (BO-HR). iSL is 1.50.
This iSL has been chosen to provide decent opportunity for good RR if price continues higher. Target is old high and +2R.
A iSL below 1.40 is a more conservative place for a weekly chart trader and what I've used personally.

 

[grah33]

Thanks ValueSnatch for the morningstar tip. i think i'll use that.


Peter: you mentioned diversification as a key reason to introduce forex trades. it may have been helpful if some forex trades would have trended while the ASX was ranging. but do you think US shares would also provide adequate diversification too, or maybe it's just too correlated?

 

[peter2]

IMO the best diversification is to incorporate shorts into a long only trading business. Shorting only one extra market, the index, will quickly offset some of the losses from the longs.

 

[The Bear]

Thanks ValueSnatch for the morningstar tip. i think i'll use that.


Peter: you mentioned diversification as a key reason to introduce forex trades. it may have been helpful if some forex trades would have trended while the ASX was ranging. but do you think US shares would also provide adequate diversification too, or maybe it's just too correlated?

Grah33 I tired to reply to your private message last year but your inbox is full.

Peter is correct going short can give you the added diversification you need but again if the market is just chopping about between a range this can whipsaw you around on the short side too.

You have an index filter right, go and look over the ASX AllOrds & the US S&P 500 for say the past 5 years...you will see there are periods when the S&P 500 is still above the filter and the AllOrds is below the filter chopping about especially between Sept 2014 to Feb 2015. This is when you could of taken opportunities in the US Market. Using Forex is just another instrument to achieve this also.

If you only want to go long and both the US & Australian Markets are risk off....then sit on your hands and leave your money in cash and learn how to trade the short side, while coming up with a trading plan that is backtested and has a positive expectancy.

With a small account overtrading and not sticking to your plan will just rob you of your money, you might as well save it and enjoy a holiday!

 

[peter2]

EOW 45 update: ASX Momentum Portfolio +22.9% ( 59% invested in 4 stocks ) XAO -14.4% (past 45wk)

That was a remarkable start to the year. The XAO fell 6%, although only -5% relative to our starting point (Mar15). Our portfolio lost only 2.3% in the general panic selling.

This weeks sells: nil
This weeks buys: HFR

HFR: I did not notice that HFR closed on our sell stop yesterday (mine is a lot lower) and it has closed higher today. In practice I would sell if price trades back at 1.50 (our sell stop), but prefer to make all trading decisions in this thread at EOD. So, sell HFR on Monday's open as it did close at a price we didn't expect yesterday. The obvious re-entry is on a BO-NH (>1.70).

Outlook: For long only traders it's grim with both weekly and daily trends, down. IMO the selling was overdone and somewhat irrational, but I can't ignore the obvious. I trust the value investors are licking their lips over the lower prices and circling like vultures. I need to see them fighting over the remains before I become interested.

 

[grah33]

thanks Bear and Peter . i always get encouraged by everybody's answers. the markets have been tough to trade (amazes me how many of you were trading when the asx was trending nicely all the time, wish i did it back then too), and i hope the future is a better one. hope it doesn't all get worse, or there wont be any investors around to give us trends ... Bear: i fixed my account. you can send me the message .i've looked at the charts of US and ASX index, and i will check it out more. if it is as you say Bear than i should probably do it. i thought it was highly correlated b4, but now i still think it is but probably not as much. by doing this i'm guessing it stops us from getting caught completely in the best of bullish times and the worst of bearish times (since positions are in both markets), keeping the account balance not as volatile. perhaps combining with forex is much better though as there is less correlation at all.

yeah, i could do with a holiday. would be nice . maybe later when i get a decent money flow going . don't get what you mean by "If you only want to go long and both the US & Australian Markets are risk off....then sit on your hands and leave your money in cash and learn how to trade the short side, ".
===

 

[peter2]

Trading update: There were two break-out candidates today to consider adding to our portfolio (BPF, BFC).

BFC: Bought todays BO (0.525), iSL is 0.45. Let's see if all the "crypto" hype helps us earn a profit in this company.

 

[peter2]

EOW 46 update: ASX Momentum Portfolio +22.6% ( 44% invested in 3 trades ) XAO -16.1% (past 46wk)

Our portfolio has retained its value while the general market fell 2%. Our cautious approach during this bear market has helped protect our capital.

This weeks sells: HFR, BKL

BKL: Sorry I didn't post that I'd raised our sell trigger to 205 early in the week. This was done to try and protect a +1R result after not selling when price traded at the +2R target. Price closed <205 on 12/1 and sold next open (13/1 at 202). This gave us a +1.2R result and reduces our portfolio heat a little. I'm still bullish BKL and have not sold my shares as my sell stop is down near break-even (~178).

BKL: I'm looking to re-buy/add this if price stays above the 190 low and looks like breaking out again.
ACX: Price is dancing around our +1R level and I'm tempted to grab it, but I won't as the sell trigger is slightly above BE and under the 5.00 number.

This weeks buys: BFC

Outlook: is ugly. :screwy: Weekly and daily trends are down. If you're like me, you'll be itching to buy shares that are much cheaper now but I have to remind myself that prices can get lower and buying as prices go down is NOT our trading plan.

 

[VSntchr]

APD looking interesting as a candidate after an upgrade today.


NOTE: volume spike on 31st was director buying.